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Russia Mortgage

Shocking Russians housing prices forced the bankers to develop a mortgage. In the heat of competition financiers rushed to give borrowers loans to buy housing at minimum cost. As a consequence – the number of mortgage transactions is growing rapidly. According to the Bank of Russia for the first half of 2006 the volume of loans to individuals for purchase of housing increased by 53% to 192 billion rubles., Of which the volume of mortgage loans has doubled and exceeded 105 billion rubles. However, in autumn, when house price growth has slowed, demand for loans gone sour. Expecting a fall in prices, people prefer to hold off buying. But the situation on the housing market is such that the flats are unlikely to fall in price, but loans – they can. Last summer, when housing rose in price by 3% -5% per week, some major banks began to offer loans to borrowers with no down payment. More cautious financiers have reduced the size of the advance payment of 5-10%.

At the same time they offered customers service to finance the cost of future transactions. That is, the bank offers a loan secured by existing housing to cover the down payment, insurance costs, etc. But such loan will have to pay a higher rate (about 3%) than in most mortgage transactions. In addition, bankers have learned to make quick decisions on loan and execute transactions within 1-2 weeks. The market significantly increased the number of special mortgage bank offices, where employees are engaged exclusively in design mortgage loans.

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